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Tele2 AB announces strong group customer intake

TELE2 AB ANNOUNCES STRONG GROUP CUSTOMER INTAKE, AND SIGNIFICANT
IMPROVEMENT IN EBITDA MARGINS IN ALL FIXED LINE OPERATIONS, MAKING THE
GROUP EBITDA POSITIVE IN THE FIRST QUARTER OF 2001
* 59% Annualized increase in Proforma Operating Revenue
* 140% Annualized increase in Group Operating Revenue
* Group EBITDA Positive for first time since SEC Acquisition, a
MSEK 358 improvement Q1/Q4
* Increasing profitability per subscriber across Continental
Europe
* 14% Annualized increase in EBITDA for Tele2 Sweden
* Tele2's Mobile Operations in Sweden reported 2.2 million
subscribers and 53% EBITDA margins
* 53% Annualized increase in Proforma Subscribers to 12.4 million
* Baltic and Eastern Europe increased EBITDA from MSEK -23 in Q4
to MSEK 59 in Q1
New York and Stockholm - April 25, 2001 - Tele2 AB (formerly NetCom AB,
"Tele2", "the Group") (Nasdaq Stock Market: TLTO), the leading
alternative pan-European telecommunications company, today announced its
consolidated results for the first quarter 2001.
Tele2 Financial Summary
SEK millions
First Fourth First
Quarter Quarter Quarter
2001 2000 2000
Operating Revenue 5,619 4,949 2,346
Operating Profit (Loss)
before depreciation and 2 -356 767
amortization (i)
(i) EBITDA
Lars-Johan Jarnheimer, President and CEO of Tele2 AB stated:
"Tele2 is now the largest pan-European telecoms brand, with more than
12.4 million subscribers covering 21 countries. The strong start to the
year reflects the improving profitability of our mobile and fixed
telephony operations in the Swedish market and in particular our ability
to manage sustained margins of over 50% in our mobile operations. In our
operations in Central and Southern Europe, as well as Luxembourg, our
subscriber intake has been strong, driving revenue growth, EBITDA losses
have been reduced and margins improved. We remain focused on customer
acquisition, churn management and cost control and believe that margin
improvements will continue to be made across the Group in 2001."
FINANCIAL AND OPERATING HIGHLIGHTS
·
· Tele2's operating revenues were MSEK 5,619 for the three months
ended March 31, 2001, an increase of 59% over the MSEK 3,531 reported
proforma in the same period last year and Group Operating revenues
consolidated increased by 140% over the same period
· The total number of subscribers for the Group at March 31, 2001
was 12.4 million, an increase of 53%
proforma over the same period of 2000. Tele2 Sweden's mobile operations
marketed under the brand name
Comviq reported 2.2 million subscribers
· Nordic operating revenues increased by 18% to MSEK 2,921 and
EBITDA increased to MSEK 784
· Tele2 Sweden's operating revenues were MSEK 2,140 for the three
months ended March 31, 2001, an increase of 16% over the same period
last year. EBITDA increased by 14% to MSEK 835 over the same period, and
increasing minutes of usage (MOU) up more than 7%
· EBITDA at the Group level improved from MSEK -356 in the fourth
quarter of 2000 to MSEK 2 in the first quarter of 2001, representing a
quarterly improvement of MSEK 358
· Tele2 Sweden's mobile telephony business reported stable
monthly average revenue per subscriber (ARPU) of SEK 201, inclusive of
postpaid and prepaid customers, the later represents 60% of total mobile
subscribers
· Tele2's three operating market areas, Central Europe, Southern
Europe and Luxembourg, reported the following:
· Central Europe reported operating revenues of MSEK 1,230
(+84%), Southern Europe MSEK 1,204 (+137%) and Luxembourg MSEK 167
(+42%)
· EBITDA losses contained and improvement in margins in Q1
increasing profitability per subscriber
· Strong Q1 ARPU's for Central Europe of SEK 149 compared to SEK
121 for the same period of 2000
· Strong Q1 ARPU's for Southern Europe of SEK 126 compared to SEK
113 for the same period of 2000
· Tele2 France reported approximately 2.2 million customers and
50% market share of customers leaving France Telecom
· Launched fixed telephony services in Spain
· Tele2 has an unrivalled position in UMTS, with license awards
in Sweden, Finland, Norway and most recently in Liechtenstein. The UMTS
system in Sweden will be constructed in partnership with Telia.
· Effective February 16, 2001, NetCom AB changed its name to
Tele2 AB to reflect the pan European strength of its Tele2 brand.
·
FINANCIAL RESULTS
(The figures shown in parenthesis correspond to the comparable periods
in 2000 and all negative amounts are distinguished with a minus sign).
As of January 1, 2001 and thereafter, Tele2 will report results by six
market areas
Proforma results for the three months ended March 31, 2001
Operating revenue proforma increased by 59% to MSEK 5,619 (3,531). Group
operating revenue was MSEK 5,619 (2,346) an increase of 140%. There has
been strong revenue growth in mobile telephony and fixed telephony
operations in particular Tele2's operations in the Baltics and Eastern
Europe and Central Europe.
Operating revenue for Tele2 Sweden was MSEK 2,140, an increase of 16%
with an encouraging 22% increase in mobile telephony in Tele2 Sweden.
Operating profit before depreciation and amortization (EBITDA) was MSEK
2 (246).
EBITDA at the Group level improved from MSEK -356 in the fourth quarter
of 2000 compared to MSEK 2 in the first quarter of 2001, representing a
quarterly improvement of MSEK 358.
Group EBITDA margins improved from -7% in the fourth quarter to 0% in
the first quarter of 2001.
EBITDA for Tele2 Sweden was MSEK 835 (731), an annualized increase of
14% and an EBITDA margin of 39% (40%). EBITDA margins for Tele2 Sweden
have shown consistent improvements on a quarterly basis during the
previous three quarters.
Operating profit (loss) after depreciation and amortization (EBIT) was
MSEK -707 (-374).
EBIT for Tele2 Sweden was MSEK 645 (562) an increase of 15%.
Net interest expense and other financial items totaled MSEK -127 (-37).
The average interest rate applied to debt outstanding was 6.2%.
Profit (loss) after financial items was MSEK -867 (-412).
Profit (loss) after tax was MSEK -1,036 (-554). Earnings (loss) per
share was SEK -7.15 (-5.34), after dilution.
Tax for the period was MSEK -171 (-143) reflecting tax payable within
the Swedish operations. Deferred tax receivables are only recorded for
losses carried forward where it is anticipated these will be used in the
near future. A cautious valuation has been made for deferred taxes from
foreign operations, which as of the three months ended March 31, 2001
were recorded as zero.
Tele2's total assets at March 31, 2001 increased by 3% to MSEK 43,523
compared to MSEK 42,345 reported at December 31, 2000.
OPERATIONAL REVIEW BY MARKET AREA
Number of customers
March 31,
2001 2000 %
Proforma
By Market Area
Nordic 5,664,000 4,483,000 +26
Baltics and Eastern Europe 357,000 55,000 +549
Central Europe 2,811,000 1,837,000 +53
Southern Europe 3,419,000 1,646,000 +108
Luxembourg 173,000 105,000 +65
TOTAL 12,423,000 8,126,000 +53
By Business Area
Fixed telephony 8,371,000 5,197,000 +61
Mobile telephony 2,773,000 1,839,000 +51
Whereof Prepaid 1,524,000 1,014,000 +50
Dial up Internet 1,279,000 1,090,000 +17
TOTAL 12,423,000 8,126,000 +53
All comparative numbers are proforma
Nordic
Operating revenue, MSEK 2,921 (2,465), +18%
EBITDA, MSEK 784 (758), +3%
The Nordic market encompasses operations in Sweden, Norway, Denmark and
Finland.
The Nordic market reported revenue growth across all of its core market
areas.
Tele2 Sweden is the main component, representing operating revenues of
MSEK 2,140, an increase of 16% over the three months ended March 31,
2001. The growth in the number of mobile prepaid and contract
subscribers accelerated during the quarter due to Tele2's market
position as the price-leading operator. Tele2 Sweden reported 2.2
million subscribers an annualized increase of 28%. Monthly average
revenue per subscriber (ARPU), inclusive of postpaid and prepaid
customers, remained stable at SEK 201 compared to SEK 209 in the same
period in 2000, despite the higher customer intake during the period.
Minutes of usage (MOU) increased by 7.4% from 92 to 98 over the same
period.
Prepaid mobile customers accounted for 60% of the total mobile
subscriber base and 41% of net new subscriber additions in the period.
Fixed telephony customer intake in Sweden was very strong, increasing
32% on an annualized basis to 1.2 million and this was reflected in
increased sales and marketing spend which reduced margins.
In January, Tele2 announced a joint venture with Telia to share the cost
of developing a UMTS network in Sweden.
Denmark and Norway are predominantly fixed telephony operations, with a
growing internet component and reported a total of 941,000 fixed
subscribers an increase of 17% over the prior year.
Tele2 Denmark recently became the first mobile virtual network operator
(MVNO), allowing the company to offer competitively priced mobile
telephony services to its existing customer base. In association with
Sonofon, Tele2 will be able to offer prepaid and ultimately post paid
contracts without the need to invest in infrastructure. Tele2 will look
to replicate MVNO status in other countries of operations where
appropriate.
Tele2 in Norway has an agreement with Telenor to lease network capacity
enabling Tele2Mobil to offer an equal range of network coverage. Tele2
was the first service provider to offer pre-paid cards in Norway and
Tele2Mobil has been operational since the second quarter of 2000.
Tele2 offers pre-paid international telephony services in Finland and
plans to launch international, long distance and Internet services to be
marketed under the Tele2 brand.
Baltics and Eastern Europe
Operating revenue, MSEK 210 (36), +483%
EBITDA, MSEK 59 (4)
The Baltic and Eastern Europe market encompasses operations in the
Baltics, Poland and the Czech Republic.
The region reported a positive EBITDA in the first quarter of 2001
compared to an EBITDA loss of 23 in the fourth quarter of 2000.
At March 31, 2001, Tele2's operations reported 357,000 gross cellular
subscribers, compared to 55,000 subscribers reported in the same period
of 2000, 44% of which were prepaid subscribers.
SIA Tele2, is the second largest mobile telecommunications company in
Latvia.
Central Europe
Operating revenue, MSEK 1,230 (668), +84%
EBITDA, MSEK -293 (-245)
The Central European market encompasses Tele2 operations in Germany, the
Netherlands, Switzerland, Austria and the United Kingdom and reported a
strong first quarter of EBITDA growth compared to the fourth quarter of
2000, reflecting the maturity of certain of the operations and their
progress to EBITDA breakeven within the three years from operational
launch.
Southern Europe
Operating revenue, MSEK 1,204 (507), +137%
EBITDA, MSEK -397 (-254)
The Southern Europe market includes Tele2 operations in France, Italy
and Spain and a license in Portugal. This region had a strong first
quarter in terms of EBITDA margin growth reflecting the improving
profitability of Tele2's operations in France and their significant
subscriber base.
Tele2 entered the French market in March 1999 and has grown to become
the largest private operator with a subscriber base of approximately 2.2
million. Tele2's large customer base gives it a strong foundation to
negotiate with mobile network operators to secure MVNO status.
Tele2 is now one of Italy's three leading private fixed line operators.
In February, Tele2 launched fixed telephony services in Spain and the
reaction from the market has been very good. Tele2 aims to be the second
leading alternative operator by the year-end. The network in Spain is IP
based using CISCO switches and the offer is entirely pre-paid.
Luxembourg
Operating revenue, MSEK 167 (118), +42%
EBITDA, MSEK 10 (1)
The Luxembourg market includes Tele2 operations in Liechtenstein,
Luxembourg and Belgium and 3C companies in all countries of operation.
Tele2 offers mobile telephony services in Liechtenstein under the Tango
brand and launched fixed telephony services under the Tele2 brand in the
second half of 2000. In March, Tele2 was awarded a UMTS license in
Liechtenstein.
In Luxembourg, Tango has a 42% market share. In March, Tango launched
GPRS in Luxembourg.
Branded Products and Services
Operating revenue, MSEK 361 (135), +167%
EBITDA, MSEK -161 (-18)
Branded Products and Services includes Optimal Telecom, C3, Everyday.com
and IntelliNet in all countries of operation. The main revenue generator
within this area is Optimal Telecom and C3.
GROUP REVIEW
Tele2 Sweden
At March 31, 2001, Tele2 Sweden recorded short term liabilities of MSEK
2,203, however, a refinancing is anticipated during the second quarter
of 2001 and hence this sum will not become payable.
Associated Companies
Everyday.com
Tele2 is the leading Internet service provider (ISP) in the Nordic
region and Tele2's 1,279,000 Internet subscribers are being offered
Everyday.com as their starting page in 11 countries. MTG publishes
content on the WWW and has significant experience in the mass media, and
marketing and advertising sales through TV channels, radio stations and
newspapers. The Everyday.com content offering is growing continuously.
The service was launched most recently in Denmark in June.
Investments and Divestments
Finland
Tele2 is the largest shareholder in Suomen Kolmegee OY (3G), which has
been granted one of only four nationwide licenses for a third generation
mobile telephony network in Finland. The Everyday.com portal and free
Internet services have been launched in the capital, Helsinki and
expansion will follow throughout the country.
In addition, Tele2 is offering an extremely competitive tariff structure
through its pre-paid phone card offering for international and national
calls. The cards are distributed through one of the major distribution
chains in Finland.
Transcom Worldwide SA
In January, Tele2 divested its 37.45% holding (acquired through the
merger with SEC) in the call center company Transcom Worldwide SA
(Transcom) to Industriförvaltnings AB Kinnevik (Kinnevik). At its
forthcoming AGM, the Board of Kinnevik will propose a dividend of
Transcom shares to its shareholders and also a public listing of
Transcom. The proceeds due to Tele2 on the sale of its interest in
Transcom will be determined by the market price of Transcom's publicly
listed equity 60 days after the market quotation day. It is therefore
anticipated that a capital gain on disposal will be recorded in the
income statement in the third quarter of 2001.
Parent Company
At the Parent company level, Tele2 reported operating revenue of MSEK 2
(2) and EBITDA of MSEK -12
(-16). Liquidity at March 31, 2001 and March 31, 2000 was MSEK 6 and
MSEK 7 respectively.
COMPANY DISCLOSURE
Annual General Meeting (AGM)
The AGM will be held at 1.30 pm local time on May 17, 2001 at Gamla
Stans Bryggerier, Tullhus 2 in Skeppsbron, Stockholm.
Second Quarter of 2001 Results
The proposed date for the release of Tele2's financial and operating
results for the period ended June 30, 2001 is August 6, 2001.
Stockholm, April 25, 2001
President and CEO, Tele2 AB
REPORT REVIEW
The financial and operating results for the period ended March 31, 2001
have not been subject to specific review by the Company's auditor.
Tele2 AB, (formerly NetCom AB), formed in 1993, is the leading
alternative pan-European telecommunications company offering fixed and
mobile telephony, data network and Internet services under the brands
Tele2, Tango, Comviq and Q-GSM to more than 12 million people in 21
countries. Tele2 operates Datametrix, which specializes in systems
integration, 3C Communications, operating public pay telephones and
public Internet services; Transac, providing billing and transaction
processing service; C³, offering co-branded pre-paid calling cards and
IntelliNet and Optimal Telecom, the price-guaranteed residential router
device. The Group offers cable television services under the Kabelvision
brand name and together with MTG, owns the Internet portal Everyday.com.
The Company is listed on the Stockholmsbörsen, under TEL2A and TEL2B,
and on the Nasdaq Stock Market under TLTO.
CONTACTS
Lars-Johan Jarnheimer Telephone: + 46 8 562 640 00
President and CEO, Tele2 AB
Hakan Zadler Telephone: + 46 8 562 640 00
CFO, Tele2 AB
Andrew Best Telephone: + 44 (0) 20 7321 5010
Investor enquiries
Bert Willborg Telephone: +46 (0) 707 27 7022
Press enquiries
Visit us at our homepage: http://www.Tele2.com
CONFERENCE CALL DETAILS
A conference call to discuss the results will be held at 14.00 (Swedish
time) / 08.00 (New York time), on Wednesday, April 25, 2001. The dial in
number is: +44 (0) 20 8240 8244 and participants should quote Tele2 AB.
A live audio stream of the conference call can also be accessed at
www.Tele2.com. Please dial in / log on 10 minutes prior to the start of
the conference call to allow time for registration. An instantaneous
recording of the conference call will be available for 48 hours after
the call on +44 (0) 20 8288 4459, access code 665 522.
APPENDICES
Consolidated Income Statement
Consolidated Balance Sheet
Consolidated Cashflow Statement
Consolidated Changes in Shareholders Equity
Market Areas split by Business Areas , Proforma
Market Areas split by Business Areas, non-Proforma
Five Year Summary
Notes to the Accounts
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